Pound Slips Against Yen Amid UK Fiscal Concerns and BoJ Hike Bets

The British Pound is losing ground against the Japanese Yen, with the GBP/JPY currency pair falling to 199.72 after being rejected from its weekly high of 200.34. This shift comes as a combination of domestic and international factors influence both currencies.

Investors are growing concerned about the UK’s financial health following a recent Gilt auction that showed softer demand for British government debt. This has created an atmosphere of caution as markets look ahead to the Chancellor’s autumn budget on November 26. The budget is expected to strike a delicate balance between new taxes and measures to support economic growth. Further adding to the pressure on the pound, a member of the Bank of England’s Monetary Policy Committee, Megan Greene, recently shared a hawkish outlook, noting that she is less concerned about a weakening labor market and sees inflation risks tilted to the upside.

Meanwhile, the Japanese Yen is finding support from growing speculation of a potential interest rate hike by the Bank of Japan (BoJ). Minutes from a recent BoJ meeting revealed discussions about the possibility of future rate increases if the economic and price outlook holds steady.

This has led to a significant shift in market sentiment, with traders now pricing in a 72% probability of a 25-basis-point hike before the end of the year. Traders are now closely watching the upcoming Tokyo Consumer Price Index (CPI) data for further clues on the BoJ’s next move.